The European Monetary Union in a Public Choice Perspective

Jennifer C. Martin-Das, earned her doctorate in economics from George Mason University, and is currently a Research Analyst at the Institute for Women’s Leadership, Rutgers, The State University of New Jersey, New Brunswick, US

The future of European Monetary Union (EMU) stands as one of the most important economic issues of the era. The author argues that in the event of macroeconomic shocks, rather than acting as a cohesive force, EMU could give rise to disunity. As EMU is not an optimal currency area, asymmetric shocks affecting each country differently could be critical to its future.

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The future of European Monetary Union (EMU) stands as one of the most important economic issues of the era. The author argues that in the event of macroeconomic shocks, rather than acting as a cohesive force, EMU could give rise to disunity. As EMU is not an optimal currency area, asymmetric shocks affecting each country differently could be critical to its future.

The success of EMU depends upon the ability of institutions in the EU to satisfy the monetary and fiscal policy demands of sufficient numbers of national constituents, interest groups, and multinational corporations. This book employs principles from public choice to analyze the EU institutions that participate in the monetary policy making process of EMU and assesses whether they have the mechanisms to cope with asymmetric macroeconomic shocks. In particular, it examines the European Council, Council of Ministers, European Commission, European Parliament and the European Central Bank.

This book provides an invaluable critique of the EMU plan and will be of interest to scholars of European economics, macroeconomics and public choice.

‘This book examines European economic and monetary union from the perspective of public choice theory – that is, whether it is consistent with the interests of the protagonists. EMU was born mainly out of the political agenda for creating ever-closer union. Professor Martin-Das explains how the interaction of economic shocks and political interests has the potential to break up EMU and frustrate that objective. The book is a careful survey of the various fields of economic thought that come together in this topic, as well as a mine of information on the European Union’s institutions and evolution.’ – Patrick Minford, University of Wales, UK

Contents: Preface 1. Introduction 2. European Economic and Monetary Integration, Prior to the Creation of the European Communities 3. European Economic and Monetary Integration: The Creation and Development of the European Communities 4. The Theory of Currency Unions 5. Economic Background to the European Monetary Union 6. Monetary and Fiscal Policy and Institutions in the European Monetary Union 7. A Rational Choice Approach to the Political Marketplace of the European Union 8. Institutions and Monetary Policy 9. Macroeconomic Shocks to the European Monetary Union 10. Political Implications of Macroeconomic Shocks 11. Conclusion References Index